All Forum Posts by: Robert Steele

Rich Weese I have to agree with a lot of the commenters here that this is a great thread you started!

My numbers were free and clear assets and the cash flow was net before taxes. I also don't plan to "retire" until my primary residence is paid off (1.5 years after the rentals are all paid) That $12K/month is less than I make now with my 9 to 5 job but like Joel Owens I live frugal and still have fun so that amount would be more than enough.

The whole couch thing was tongue in cheek but boy it sure would be nice for the first week after quitting my day job.

There was a good episode on Frontline called The Retirement Gamble that really made me greatfull that I discovered passive income through REI.

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

John Chapman I think if we had the guts to invest in south Dallas we could get those kind of returns.

Steve E. No I do not think it is a bubble. Simple supply and demand. There is only something like 2.8 months supply on market where 6 months is considered balanced. I don't expect it to last forever. The Dallas housing market is very elastic. The builders will play catch up and things will return to a more sedate 4% annual appreciation. Local economist Mark Dotzour thinks it might continue like this until mid 2014.

Thanks Steve E. Wow. If my Realtor treated me that way I dump him or her. Granted, a bigger escrow shows you are serious but I agree $12K does sound like too much.

My Realtor has been telling me similar stories about taking a buyer to look at a property the day it comes on the market and then by the time they submit the offer it is already gone. This is very unusual for this area.

What is the saying she has; something like she will get you the right property at the right price but you must have patience. I know she just closed on a duplex for the sister of a work colleague. It took 4 months of looking and making offers but they got what they wanted to for the right price in the end!

Rich Weese I passed the acquisition phase a year or two ago and am currently in the payoff phase. I should be finished with that in the next 7 to 8 years. I will then have $2MM in assets producing about $12K/month in today's dollars. That's enough for me thanks.

My wife may or may not still be self employed. I may or may not start my own business or do contract work on the side. Depending on how bored I get sitting on that couch all day ;)

When I read those retirement articles about needing such and such amount of money in the stock market to retire I feel like I am living on a different planet as that is so far removed from my strategy. Passive income from RE for the win!

John Chapman how long have you been doing this? I think you've got it backwards.

Dallas appreciation average is 4% annual. It has been 2% for most of the last decade. Cash flow is easy to come by here because houses are affordable.

I am just looking for financial independence. I don't need a yacht. I have a successful professional career but don't like 9 to 5 and not being my own boss.

I identify with the main protagonist (Peter Gibbons) from the movie Office Space:

Peter Gibbons: What would you do if you had a million dollars?
Lawrence: I'll tell you what I'd do, man: two chicks at the same time, man.
Peter Gibbons: That's it? If you had a million dollars, you'd do two chicks at the same time?
Lawrence: Damn straight. I always wanted to do that, man. And I think if I were a millionaire I could hook that up, too; 'cause chicks dig dudes with money.
Peter Gibbons: Well, not all chicks.
Lawrence: Well, the type of chicks that'd double up on a dude like me do.
Peter Gibbons: Good point.
Lawrence: Well, what about you now? What would you do?
Peter Gibbons: Besides two chicks at the same time?
Lawrence: Well, yeah.
Peter Gibbons: Nothing.
Lawrence: Nothing, huh?
Peter Gibbons: I would relax... I would sit on my *** all day... I would do nothing.
Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do ****.

I know you think you are in the right but that is not how it looks to me. I'd take all the advice given here and apply it in the future. For right now, I think you should settle with the tenant out of court.

There is a school of thought that says if your strategy is to retire on the cash flow a decade or more from now then you should be focused more on picking good properties in the best neighborhoods and less focused on immediate gain.

A class C property in a rough neighborhood might have a high cap rate and cash flow like mad but how much of that cash flow will you get to keep due to evictions and trashy tenants? In a decade from now is that house going to be desirable enough to have higher rents and appreciation? Probably not.

A solid class A or B property in a good neighborhood with good schools might have a low cap rate and barely cash flow but your headaches will likely be less and at some point in the future you will still have a desirable property that commands good rents and has appreciated.

Well that is at least how it has panned out in my experience.

Ouch. If it was me I'd get rid of it. Not only is it costing you money but it is probably unsettling your focus that could be better trained on winners.

I'ts ok to take a loss. The best lost to take is the earliest. Don't let it snowball and bury you.

I had a 4bdr for a year that wasn't performing. Luckily I found the right sucker, er buyer, and I only had to bring $4K to closing when I sold it. Several years since then the price is lower than what I sold it for and the rents have gone nowhere. Cutting it loose early was a good move.